Last-minute Tube rescue deal means fare hikes for London passengers

Mayor Sadiq Khan says government waited until eleventh hour to avert financial crunch for London’s transport authority

Sadiq Khan was forced to seek a bailout after seeing revenues from fares fall by 90 per cent as commuters obeyed government instructions to stay at home (Getty)

Public transport users in London are facing fare hikes after mayor Sadiq Khan secured a last-minute £1.6 billion deal to save the service from financial collapse due to the coronavirus crisis.

The bailout agreed with transport secretary Grant Shapps, involves a grant of almost £1.1 billion and £505 million in loans which will have to be repaid by Transport for London.

Running until October, it will also mean the suspension of Freedom Passes for elderly and disabled passengers at peak times. Bus fares, waived during lockdown, will be restored and the congestion charge for motorists in the city centre reinstated and free travel for under-18s will be temporarily suspended.

Fares will rise by 1 per cent above inflation from January, ending a four-year freeze operated by Mr Khan.

And TFL is required to increase service levels "as soon as possible" to make it more viable for passengers to practise social distancing following the partial return to work in the capital. The mayor said that his team had been running as many services "as humanly possible" given high levels of staff absence due to sickness and self-isolation, and aims to have 85 per cent of bus services and 75 per cent of Tube trains running and reopen some of the city's 37 closed stations by Monday.

Mr Khan criticised the government for waiting until the last minute to offer a rescue package, with TfL on the brink of being forced to slash Underground, train and buses to a bare-bones service.​

Agreement came after almost two months of negotiations, on the eve of TfL’s chief financial officer being forced to issue a Section 114 Notice, barring the organisation from committing to any spending going beyond its minimum obligations.

The mayor accused the DFT of “making ordinary Londoners pay the cost for doing the right thing on Covid-19” and said the deal was a "sticking plaster" which would not resolve a faulty funding model which leaves the UK capital as the only major city in Western Europe receiving no day-to-day funding from central government for its transport services, leaving it reliant on fares, advertising and the congestion charge.

He said it was "not the deal I wanted", but added: "It was the only deal the government put on the table and I had no choice but to accept it to keep the Tubes and buses running.

“Fares income has fallen by 90% in the last two months because Londoners have done the right thing and stayed at home – so there simply isn’t enough money coming in to pay for our services.”​

Speaking on Thursday ahead of the deal, the mayor told LBC: “We’ve been spending £600m a month, paying for services and getting nothing back from our customers, or very little.

“Although we had at the start of this crisis a cash reserve of north of £2.1bn, that is running out and we’re required by law to keep two months’ worth of money in reserve to pay for services.”

He said it “beggared belief” that the government had waited until the eleventh hour to provide support, at a time when Mr Shapps has been urging him to return the Tube to full services to allow a return to work under social distancing conditions.

Following the agreement, Mr Shapps said: “People should avoid using public transport and work from home wherever possible, but as measures are slowly lifted it is vital that Londoners who need to use TfL services feel safe and secure.

“We must drive an increase in services to support social distancing and ensure our capital keeps moving, driving the economic recovery of this country going forward.

“This deal will encourage a real move towards greener and healthier walking and cycling options, ease pressure on our public transport and provide certainty and stability for London’s transport services in the future.”